AUDIT REPORT 

Audit of NRC’s Agreement State Program 

OIG-09-A-08 March 16, 2009 

All publicly available OIG reports (including this report) are accessible through 

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/ 
UNITED STATES 

NUCLEAR REGULATORY COMMISSION 

WASHINGTON, D.C. 20555-0001 

OFFICE OF THE 

INSPECTOR GENERAL 

 March 16, 2009 

MEMORANDUM TO: R. William Borchardt 

Executive Director for Operations 

FROM: Stephen D. Dingbaum /RA/ 

 Assistant Inspector General for Audits 

SUBJECT: AUDIT OF NRC’S AGREEMENT STATE PROGRAM 

(OIG-09-A-08) 

Attached is the Office of the Inspector General’s (OIG) audit report titled, Audit of NRC’s 

Agreement State Program. 

The report presents the results of the subject audit. Agency comments provided at the 

December 16, 2008, exit conference, a subsequent January 9, 2009, meeting, and 

submitted formally on February 26, 2009, have been incorporated, as appropriate, into 

this report. 

Please provide information on actions taken or planned on each of the 

recommendations within 30 days of the date of this memorandum. Actions taken or 

planned are subject to OIG followup as stated in Management Directive 6.1. 

We appreciate the cooperation extended to us by members of your staff during the 

audit. If you have any questions or comments about our report, please contact me at 

415-5915 or Sherri Miotla, Team Leader, Nuclear Safety Audit Team, at 415-5914. 

Attachment: As stated 
Electronic Distribution

Edward M. Hackett, Executive Director, Advisory Committee on Reactor 

 Safeguards 

E. Roy Hawkens, Chief Administrative Judge, Atomic Safety and 

 Licensing Board Panel 

Karen D. Cyr, General Counsel 

Brooke Poole, Director, Office of Commission Appellate Adjudication 

Jim E. Dyer, Chief Financial Officer 

Margaret M. Doane, Director, Office of International Programs 

Rebecca L. Schmidt, Director, Office of Congressional Affairs 

Eliot B. Brenner, Director, Office of Public Affairs 

Annette Vietti-Cook, Secretary of the Commission 

R. William Borchardt, Executive Director for Operations 

Bruce S. Mallett, Deputy Executive Director for Reactor 

 and Preparedness Programs, OEDO 

Martin J. Virgilio, Deputy Executive Director for Materials, Waste, Research, 

 State, Tribal, and Compliance Programs, OEDO 

Darren B. Ash, Deputy Executive Director for Corporate Management 

 and Chief Information Officer, OEDO 

Vonna L. Ordaz, Assistant for Operations, OEDO 

Timothy F. Hagan, Director, Office of Administration 

Cynthia A. Carpenter, Director, Office of Enforcement 

Charles L. Miller, Director, Office of Federal and State Materials 

 and Environmental Management Programs 

Guy P. Caputo, Director, Office of Investigations 

Thomas M. Boyce, Director, Office of Information Services 

James F. McDermott, Director, Office of Human Resources 

Michael R. Johnson, Director, Office of New Reactors 

Michael F. Weber, Director, Office of Nuclear Material Safety and Safeguards 

Eric J. Leeds, Director, Office of Nuclear Reactor Regulation 

Brian W. Sheron, Director, Office of Nuclear Regulatory Research 

Corenthis B. Kelley, Director, Office of Small Business and Civil Rights 

Roy P. Zimmerman, Director, Office of Nuclear Security and Incident Response 

Samuel J. Collins, Regional Administrator, Region I 

Luis A. Reyes, Regional Administrator, Region II 

Mark A. Satorius, Region III 

Elmo E. Collins, Jr., Regional Administrator, Region IV 
Audit of NRC’s Agreement State Program 

i

EXECUTIVE SUMMARY 

BACKGROUND

In accordance with section 274 of the Atomic Energy Act, as 

amended, the Nuclear Regulatory Commission (NRC) may 

relinquish its authority to regulate byproduct, source, and limited 

quantities of special nuclear material to States (Agreement 

materials). These States must first demonstrate that their 

regulatory programs are adequate to protect public health and 

safety and compatible with NRC’s program. States that have 

entered into an agreement assuming this regulatory authority from 

NRC are called Agreement States. There are currently 35 

Agreement States. 

NRC has programmatic responsibility to periodically review the 

actions of the Agreement States to comply with the requirements of 

the Atomic Energy Act. NRC's policy is to evaluate Agreement 

State radiation control programs using performance indicators to 

ensure that public health and safety is being adequately protected 

and that Agreement State programs are compatible with NRC’s 

program. In order to accomplish this task, NRC periodically 

reviews Agreement States using the Integrated Materials 

Performance Evaluation Program (IMPEP). 

PURPOSE

The audit objective was to assess NRC's oversight of the adequacy 

and effectiveness of Agreement State programs. The Office of the 

Inspector General (OIG) focused its review on the IMPEP process 

as well as other elements of the Agreement State program. 

RESULTS IN BRIEF

The purpose of the Agreement State program is to ensure the 

adequate protection of public health and safety in the uses of 

Agreement materials. Although NRC maintains oversight of 

Agreement States, there are program adequacy and effectiveness 

issues that require management’s attention. Specifically, 

3⁄4 NRC does not effectively monitor IMPEP operational issues. 
Audit of NRC’s Agreement State Program 

ii

o Agreement State program managers are unaware of 

several operational issues because there is no 

systematic mechanism for conducting self-assessments 

and capturing lessons learned for IMPEP. Consequently, 

IMPEP may not be as effective as it could be for 

assessing the adequacy and compatibility of Agreement 

State programs. 

3⁄4 NRC could be challenged to re-exert authority over an 

Agreement State program in the event of an emergency. 

o Under the Atomic Energy Act, NRC can temporarily 

suspend its agreement with a State during an emergency 

situation. However, NRC has not identified all of the 

information necessary for re-exerting authority and lacks 

the formal procedural guidance about what information is 

needed about Agreement State programs and materials 

licensees. Without this valuable planning information, 

NRC could lose oversight and awareness of licensees 

and materials. 

3⁄4 NRC lacks standardization in communications with, and 

collection of information from, the Agreement States. 

o NRC lacks (1) standardization in communication 

procedures, and (2) a standardized data collection 

process that can be used as a basis for developing a 

national information sharing tool. As a result, some 

States may be unaware of important issues, and NRC 

does not have a full and accurate picture of Agreement 

State regulatory activities. 

3⁄4 Weaknesses exist in NRC’s review of Agreement State event 

reporting. 

o NRC’s reviews of whether an Agreement State has 

appropriately reported all events to the Nuclear Material 

Events Database (NMED) may not be consistently 

performed. NRC’s IMPEP reviews do not require an 

analysis of unreported events to determine whether such 

events are being appropriately identified for and included 

in NMED. Consequently, NRC and the public may have 

an inaccurate accounting of material events in some 

States, which could also hamper events data trend 

analysis efforts. 
Audit of NRC’s Agreement State Program 

iii

RECOMMENDATIONS

This report makes five recommendations to help NRC improve its 

partnership with, and oversight of, Agreement States. A 

Consolidated List of Recommendations appears in Section IV. 

OIG ANALYSIS OF AGENCY COMMENTS

On December 3, 2008, OIG provided a draft report to the Executive 

Director of Operations. On February 26, 2009, the Executive 

Director for Operations provided a formal response to this report. 

The agency’s transmittal letter and specific comments on this report 

are included in their entirety as Appendix B. 

The final report incorporates revisions made, where applicable, as 

a result of meetings with NRC staff and the agency’s written 

comments. Appendix C contains OIG’s analysis of the agency’s 

formal response. 
Audit of NRC’s Agreement State Program 

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ABBREVIATIONS AND ACRONYMS

FSME Office of Federal and State Materials and 

Environmental Management Programs 

IMPEP Integrated Materials Performance Evaluation Program 

MRB Management Review Board 

NMED Nuclear Material Events Database 

NRC Nuclear Regulatory Commission 

NSIR Office of Nuclear Security and Incident Response 

OIG Office of the Inspector General 

OMB Office of Management and Budget 

PM Project Manager 

RSAO Regional State Agreements Officer 

SA State Agreement 
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Audit of NRC’s Agreement State Program 

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TABLE OF CONTENTS

EXECUTIVE SUMMARY..............................................................i 

ABBREVIATIONS AND ACRONYMS .........................................v 

I. BACKGROUND...................................................................1 

II. PURPOSE ..........................................................................5 

III. FINDINGS ...........................................................................6 

A. MANAGEMENT DOES NOT EFFECTIVELY 

MONITOR IMPEP OPERATIONAL ISSUES..........................6 

B. NRC COULD BE CHALLENGED TO RE-EXERT AUTHORITY 

OVER AN AGREEMENT STATE PROGRAM IN THE 

 EVENT OF AN EMERGENCY ...........................................10 

C. NRC LACKS STANDARDIZATION IN COMMUNICATIONS 

 WITH, AND COLLECTION OF INFORMATION FROM,

THE AGREEMENT STATES .............................................13 

D. WEAKNESSES EXIST IN NRC’S REVIEW OF AGREEMENT 

 STATE EVENT REPORTING............................................19 

IV. CONSOLIDATED LIST OF RECOMMENDATIONS..........22 

APPENDICES 

A. SCOPE AND METHODOLOGY ........................................23 

B. FORMAL AGENCY COMMENTS .....................................25 

C. OIG ANALYSIS OF AGENCY COMMENTS .....................27 
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Audit of NRC’s Agreement State Program 

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I. BACKGROUND 

In accordance with Section 274 of the Atomic Energy Act, as 

amended, “Cooperation with States,” the Nuclear Regulatory 

Commission (NRC) may relinquish1 its authority to regulate 

byproduct, source, and limited quantities of special nuclear 

material2 to States, hereafter collectively referred to as “Agreement 

materials.” These States must first demonstrate that their 

regulatory programs are adequate to protect public health and 

safety and compatible with NRC’s program. States that have 

entered into an agreement assuming this regulatory authority from 

NRC are called Agreement States. There are currently 35 

Agreement States, and 3 States that have submitted a letter of 

intent to become Agreement States (see Figure 1). 

Figure 1: Map of the Agreement States 

Source: Information depicted based on NRC Web site as of September 9, 2008. 

 

1 Under Section 274j, the Commission retains authority to terminate or suspend the agreement and re-exert 

licensing and regulatory authority.

2 The Atomic Energy Act of 1954, as amended, defines byproduct material, in part, as any radioactive 

material (except special nuclear material) yielded in or made radioactive by exposure to the radiation 

incident to the process of producing or utilizing special nuclear material.
Audit of NRC’s Agreement State Program 

2

NRC and the Agreement States are responsible for ensuring the 

adequate protection of public health and safety in the uses of 

Agreement materials. Accordingly, NRC and the Agreement States 

must have supporting legislative authority, an implementing 

organizational structure and procedures, and financial and human 

resources to effectively administer a radiation control program. 

The Office of Federal and State Materials and Environmental 

Management Programs (FSME) administers the Agreement State 

program. For fiscal year 2008, the agency budgeted $57.4 million, 

including 270 full-time equivalent staff, for activities to regulate 

nuclear material users. Of the budgeted full-time equivalent staff, 

approximately 10 percent was dedicated to the Agreement State 

program. FSME activities include reviewing State requests to 

assume authority to regulate certain Agreement materials, 

reviewing Agreement State performance, monitoring State 

activities, and providing advice and guidance to Agreement States. 

Most of the NRC regions also have one or two Regional State 

Agreements Officers (RSAO) that serve as the regional focal point 

to implement the Agreement State program. Each RSAO is 

assigned a number of Agreement States for which they serve as 

NRC’s primary point-of-contact. 

NRC has programmatic responsibility to periodically review the

actions of the Agreement States to comply with the requirements of 

the Atomic Energy Act. NRC's policy is to evaluate Agreement 

State radiation control programs using performance indicators to 

ensure that public health and safety is being adequately protected 

and that Agreement State programs are compatible with NRC’s 

program. In order to accomplish this task, NRC periodically 

reviews Agreement States. In 1994, the agency revised its 

program for reviewing Agreement States and created the Integrated 

Materials Performance Evaluation Program (IMPEP). 

IMPEP Review Process 

NRC uses IMPEP to evaluate each Agreement State radiation 

control program generally every 4 years in order to provide an 

overall assessment of a State’s adequacy to protect public health 

and safety and compatibility with NRC’s program. Management 

Directive 5.6, Integrated Materials Performance Evaluation 

Program, establishes the process and defines the performance 

criteria by which NRC conducts such periodic IMPEP assessments 

to determine the adequacy and compatibility of Agreement State 

programs. 
Audit of NRC’s Agreement State Program 

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As shown in Figure 2 below, the IMPEP review process begins 

when the IMPEP project manager (PM)—an individual assigned by 

FSME to oversee the program’s operations—prepares a schedule 

of the upcoming reviews and appoints members to an IMPEP 

review team. IMPEP teams are composed of three to eight State 

and NRC employees, including a team leader and the RSAO to the 

State under review. Team members are required to attend a 1 1/2 -

day training session and periodic refresher training on IMPEP, 

which emphasizes the value of IMPEP guidance and procedures 

and the importance of being prepared. 

Figure 2: Integrated Materials Performance Evaluation Program (IMPEP) 

Review Process 

Prior to the start of the onsite IMPEP review, the IMPEP PM 

provides the teams with compact discs that contain programspecific information, IMPEP procedures and guidance, and 

templates of model IMPEP reports. Accordingly, IMPEP team 

members review State responses to a pre-IMPEP questionnaire 

and perform inspection accompaniments before the onsite review. 

The pre-IMPEP questionnaire is a form with a series of questions 

that States complete prior to the IMPEP review, and IMPEP team 

members are responsible for evaluating the State’s responses prior 

to the start of the onsite review. Inspection accompaniments are 
Audit of NRC’s Agreement State Program 

4

performed by selected IMPEP team members and/or NRC staff 

who accompany Agreement State inspectors at different types of 

licensed facilities to evaluate their knowledge and capabilities. 

During the onsite review, the IMPEP team evaluates the State’s 

program against a set of performance indicators. IMPEP reviews 

should identify the underlying cause of performance weaknesses 

related to the performance indicator. Such performance 

weaknesses are referred to as findings, and the IMPEP team will 

typically propose recommendations for issues that need to be 

addressed. Throughout the onsite review, the IMPEP team briefs 

the State’s program management on the status and preliminary 

findings of the review. At the end of the onsite review, the IMPEP 

team assesses whether the State’s program is adequate to protect 

public health and safety and is compatible with NRC’s program. 

Within 30 days of conclusion of the onsite review, the IMPEP team 

leader assembles the report, submits it to the IMPEP project 

manager for a technical review, and then issues the draft report to 

the State for factual review. The IMPEP team next incorporates the 

State’s comments and then presents the report containing 

preliminary findings to the Management Review Board (MRB) 

during a meeting that includes State representatives and the 

IMPEP team. 

The MRB is composed of NRC senior management and a nonvoting State member. It is responsible for making a final overall 

assessment of a State’s adequacy to protect the public health and 

safety and compatibility with NRC’s program. At the MRB meeting, 

the State under review has an opportunity to comment on NRC’s 

review of its program. Within 104 days of the end of the onsite 

review, the IMPEP report is finalized and issued. 

Other Agreement State Activities 

The collective framework within which NRC and the Agreement 

States function in carrying out their respective radiation safety 

regulatory programs is called the National Materials Program. The 

term “National Materials Program” was conceptualized in late 1990, 

and focuses on the shared program activities between NRC and 

the Agreement States as well as the ability of the Agreement States 

to assume a greater proportional responsibility for shared program 

activities. The program is also intended to reflect the evolving 

relationship among NRC and the Agreement States.
Audit of NRC’s Agreement State Program 

5

NRC serves as the Federal-level presence for radioactive materials 

safety and security under the National Materials Program, which 

includes coordinating activities between NRC and the Agreement 

States. One example of a coordinating activity is Agreement State 

letters. An Agreement State letter is a document prepared by NRC 

to, among other things, convey programmatic information to the 

States and request comments on policy changes. Another example 

is NRC’s coordination of Agreement State data submissions to the 

Nuclear Material Events Database (NMED), which contains 

information on the occurrence, description, and resolution of events 

involving the use of radioactive materials. 

II. PURPOSE 

The audit objective was to assess NRC's oversight of the adequacy 

and effectiveness of Agreement State programs. The Office of the 

Inspector General (OIG) focused its review on the IMPEP process 

as well as other elements of the Agreement State program. 

Appendix A provides information on the audit scope and 

methodology. 
Audit of NRC’s Agreement State Program 

6

III. FINDINGS

The purpose of the Agreement State program is to ensure the 

adequate protection of public health and safety in the uses of 

Agreement materials. Although NRC maintains oversight of 

Agreement States, there are program adequacy and effectiveness 

issues that require management’s attention. Specifically: 

A. Management does not effectively monitor IMPEP operational 

issues. 

B. NRC could be challenged to re-exert authority over an 

Agreement State program in the event of an emergency. 

C. NRC lacks standardization in communications with, and 

collection of information from, the Agreement States. 

D. Weaknesses exist in NRC’s review of Agreement State event 

reporting. 

A. Management Does Not Effectively Monitor IMPEP Operational 

Issues 

FSME management does not effectively monitor operational issues 

related to the IMPEP program. Office of Management and Budget 

(OMB) internal control guidance states that a systematic process 

for monitoring the effectiveness of a program should be in place for 

addressing deficiencies. However, FSME management is unaware 

of several operational issues because there is no systematic 

mechanism for conducting self-assessments and capturing lessons 

learned for IMPEP. Consequently, IMPEP may not be as effective 

as it could be for assessing the adequacy and compatibility of 

Agreement State programs. 

Guidance for Monitoring the Effectiveness of a Program 

OMB Circular A-123, Management’s Responsibility for Internal 

Control, states that a systematic process for monitoring the 

effectiveness of a program should be in place for addressing 

deficiencies. This circular introduces several objectives for 

developing and maintaining internal control activities. One of those 

objectives, “Monitoring,” states that periodic assessments should 

be integrated as part of management’s continuous oversight of 
Audit of NRC’s Agreement State Program 

7

internal control. In addition, management should evaluate the 

internal control deficiencies that are reported and take proper action 

to correct them. 

Management Unaware of Operational Issues 

During OIG’s review, FSME management was unaware of several 

IMPEP operational issues, including: 

3⁄4 A lack of underlying cause analysis during IMPEP reviews and 

in reports. 

3⁄4 An inconsistent use of the pre-IMPEP questionnaire. 

3⁄4 IMPEP team leaders underprepared to conduct reviews. 

3⁄4 Selected IMPEP team members and/or NRC staff 

accompanying State inspectors unaware of associated 

guidance. 

FSME management was unaware that the underlying cause of a 

performance weakness in an Agreement State program is rarely 

discussed during IMPEP reviews and stated in reports. Identifying 

the underlying cause is important in order to focus IMPEP review 

recommendations towards State program weaknesses.3

 However, 

OIG attended four onsite reviews and the underlying cause for the 

performance weaknesses identified was not consistently mentioned 

in the IMPEP teams’ finding discussions. OIG also reviewed 

recently issued IMPEP reports,4 and determined that the majority of 

the recommendations in these reports were not directly supported 

with a discussion of the underlying, rather than the apparent, 

cause. FSME managers contend that the IMPEP reports have 

sufficient discussions to support the recommendations. 

FSME management was also unaware of the inconsistent use of 

the pre-IMPEP questionnaire responses. The questionnaire 

responses are provided to the IMPEP team members during the 

weeks prior to the onsite IMPEP review. However, OIG observed 

that there were IMPEP team members, including a team leader, 

who had not thoroughly analyzed the questionnaire responses prior 

to the onsite review. For example, during one IMPEP review, OIG 

observed that the State had only partially answered certain 

questions, yet the IMPEP team members asserted that the State 

 

3 An underlying cause is the fundamental reason—rather than the apparent reason or symptom—that 

explains a program weakness or performance issue.

4 OIG reviewed IMPEP reports issued from January 19, 2007, to August 27, 2008.
Audit of NRC’s Agreement State Program 

8

had thoroughly answered all of the questions. In another IMPEP 

review, a team member spent part of the review looking for an 

answer that was already provided in the State’s questionnaire 

response. 

Another issue lacking FSME management awareness pertains to 

team leader preparation. OIG observed that some team leaders 

were not thoroughly prepared for their respective IMPEP reviews. 

During one IMPEP review, the team leader was not aware of how 

many outstanding recommendations the State had from the 

previous IMPEP review. During another review, the team leader 

did not understand that particular State’s management structure 

and spent a considerable amount of time during the review trying to 

discern it. Also, during the IMPEP reviews that OIG observed, only 

one team leader prompted the team to discuss the underlying 

cause of the team members’ findings. 

FSME management was also unaware that selected IMPEP team 

members and/or NRC staff who accompanied State inspectors are 

not aware of associated inspection guidance. State Agreement 

(SA)-102,5 Reviewing the Common Performance Indicator, 

Technical Quality of Inspections, provides guidance on the 

accompaniment role of the IMPEP team member, including 

guidance to observe the State inspector’s work rather than help 

with the inspection effort. Yet some accompaniment participants 

were unaware of this guidance. OIG interviewed nine State and 

NRC employees who had performed accompaniment inspections 

during the past 2 years, and one-third of them were not aware of 

SA-102. Moreover, nearly half of these accompaniment 

participants were unaware that SA-102 also provides, as a 

convenience, a checklist of items to review while performing these 

inspections. 

No Systematic Mechanism for Conducting Self-Assessments 

FSME has not established a systematic mechanism for conducting 

self-assessments and capturing IMPEP lessons learned. In 2001, 

after the first round of IMPEP reviews,6

 NRC appointed a working 

group to assess the IMPEP program for lessons learned. However, 

this group issued only one report and no further assessments were 

conducted. The working group’s report, dated April 2002, 

examined several program areas, such as the IMPEP 

questionnaire, guidance for conducting IMPEP reviews, and the 

 

5 SAs are Agreement State program procedures issued by FSME.

6 The first round of IMPEP reviews consisted of the first review for each Agreement State and was 

concluded in 1999.
Audit of NRC’s Agreement State Program 

9

effectiveness of the performance indicators. Although this review 

examined some structural issues of the IMPEP review process and 

offered subsequent improvements, the working group did not 

address IMPEP program operational issues. FSME management 

confirmed that after this working group, there has not been another 

formal IMPEP assessment. 

Nonetheless, FSME does seek opportunities to continuously 

improve the IMPEP program on a review-to-review basis, for 

example, by seeking feedback from managers of programs that 

have been reviewed and through the IMPEP PM’s participation on 

IMPEP reviews. FSME management has delegated authority of 

IMPEP operations to the IMPEP PM and contends that IMPEP 

team member performance issues are brought to FSME 

management’s attention. 

However, FSME management is still reliant on staff to self-identify 

and communicate such issues, mostly on an informal basis. For 

example, one manager said that operational issues are 

communicated from staff to management on a case-by-case basis. 

Another manager stated that FSME management wants to know 

how well the teams are performing, but this communication is done 

informally. 

IMPEP May Not Be As Effective As It Could Be 

 

Without a systematic mechanism for capturing lessons learned, 

IMPEP will not be as effective as it could be for assessing the 

adequacy and compatibility of Agreement States. FSME 

management may be unaware of a variety of IMPEP operational 

issues because it attends to these issues on an informal basis. 

Consequently, operational issues that may hinder the effectiveness 

of the program are not being captured using a methodical 

approach. Improving the communication and documentation of 

operational issues to FSME management would help identify and 

correct issues in a timely manner and enhance the effectiveness of 

IMPEP. Moreover, having a systematic mechanism for conducting 

self-assessments would complement FSME’s ongoing efforts at 

program self-improvement and help IMPEP better adapt to a 

dynamic regulatory environment. 

 

Recommendation: 

1. Develop a mechanism for conducting self-assessments and 

capturing lessons learned for IMPEP on a regular basis.
Audit of NRC’s Agreement State Program 

10

B. NRC Could Be Challenged To Re-exert Authority Over an 

Agreement State Program in the Event of an Emergency 

In the event of an emergency in an Agreement State whereby the 

State regulators are partially or fully incapacitated, NRC could be 

challenged to re-exert authority over an Agreement State program 

due to a lack of access to certain program and materials licensee 

information. Under the Atomic Energy Act, NRC can temporarily 

suspend its agreement with a State during an emergency situation. 

However, NRC has not identified all of the information necessary 

for re-exerting authority and lacks the formal procedural guidance 

about what information is needed about Agreement State programs 

and materials licensees. Without this valuable planning 

information, NRC could lose oversight and awareness of licensees 

and materials. 

Emergency Suspension of Agreement 

NRC’s authority to suspend an Agreement State program stems 

from Section 274j of the Atomic Energy Act, “Termination of 

Agreement,” which specifically states that the Commission may 

temporarily suspend its agreement with a State if an emergency 

situation exists.7

 FSME has issued an implementing procedure 

associated with Section 274j. This procedure, SA-112, Emergency 

Suspension of a Section 274b Agreement, describes the process to 

be used by the Commission to temporarily suspend an Agreement 

State program when an emergency situation exists. According to 

SA-112, the appropriate NRC region is responsible for coordinating 

with the State to make sure that necessary information is gathered 

and action is taken to notify the affected licensee, or groups of 

licensees, that NRC is taking over the State’s program. 

NRC Lacks Certain Agreement State Information

Although NRC has a procedure in place to suspend an Agreement 

State program in the event of an emergency, NRC could be 

challenged to re-exert authority over an Agreement State program. 

This challenge stems from the agency’s lack of information that the 

 

7 Section 274j specifically states that “the Commission, upon its own motion or upon request of the 

Governor of any State, may, after notifying the Governor, temporarily suspend all or part of its agreement 

with the State without notice or hearing if, in the judgment of the Commission: (A) an emergency situation 

exists with respect to any material covered by such an agreement creating danger which requires immediate 

action to protect the health or safety of persons either within or outside of the State, and (B) the State has 

failed to take steps necessary to contain or eliminate the cause of the danger within a reasonable time after 

the situation arose.”
Audit of NRC’s Agreement State Program 

11

Agreement States have regarding materials licensees in their plans 

and programs that would be necessary for NRC to effectively 

manage an Agreement State’s program during the emergency 

conditions. 

Such information might also include the Agreement States’ own 

continuity of operations planning that could help Federal and State 

regulators in the event of a major disaster. For example, one 

Agreement State has various types of program contingency plans 

addressing such topics as emergency operations support at the 

State level, business continuity for critical services, and disaster 

recovery for critical technology systems. To prepare for 

emergencies, this Agreement State has geographically dispersed 

offices that can assume duties in support of each other to minimize 

the impact of a major disaster in any one location. Managers in this 

Agreement State said that it would be difficult for NRC to assume 

control of the State's program if a natural disaster occurred 

because NRC does not understand the State’s continuity planning. 

Therefore, this State’s program managers hypothesized that, in the 

event of an emergency, NRC would not be able to help effectively 

and could potentially get in the way of the State’s post-crisis 

actions. 

OIG requested documentation for the agency’s plan for re-exerting 

authority in Agreement States from both FSME and the Office of 

Nuclear Security and Incident Response (NSIR), and neither office 

could provide a formal plan. One FSME manager stated that he 

had never thought about a situation in which NRC would need to 

immediately re-exert authority over an Agreement State program. 

Another manager believed that NRC would have enough time to 

coordinate with State officials in the event of an emergency. This 

perspective was echoed by an NSIR official, who stated that in the 

event of an emergency, NRC would contact the State and, 

together, NRC and the State would discern how to handle the 

situation. However, it may be unrealistic to assume that there 

would be adequate time to coordinate with State officials or that 

State officials would even be available for such coordination.

Agency Lacks Guidance To Identify Needed Information 

NRC’s lack of Agreement State information that would be 

necessary for the agency to temporarily re-exert authority over 

Agreement State programs stems from the following: 

o NRC has not formally identified all of the information 

necessary for re-exerting authority. 
Audit of NRC’s Agreement State Program 

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o NRC lacks the formal procedural guidance about what 

information is needed about Agreement State programs and 

materials licensees. 

NRC does not routinely request from Agreement States program 

and licensee information that would be necessary for NRC to reexert authority in a State. Neither FSME nor NSIR collects this kind 

of information. Furthermore, OIG observed that State continuity 

planning was not examined during IMPEP reviews. An IMPEP 

team member stated that IMPEP reviews do not collect this 

information because NRC does not classify State continuity of 

operations planning as an adequacy or compatibility issue. 

Furthermore, NRC lacks formal procedural guidance about what 

information is needed about Agreement State programs and 

materials licensees. For example, while SA-112 describes the 

process to temporarily suspend an Agreement State program when 

an emergency situation exists, it does not describe the Agreement 

State program and materials licensee information needed for reexerting authority over a State. 

NRC Could Lose Agreement State Oversight and Awareness 

NRC could be challenged to re-exert authority over Agreement 

State programs because the agency does not have access to 

certain program and materials licensee information that the 

Agreement States have. Thus, there is a greater potential for NRC 

to lose oversight and awareness of Agreement State licensees and 

materials. It is especially important now, in the post-9/11 and postHurricane Katrina environment, that NRC maintain awareness of 

Agreement States’ programs and materials licensee information 

because this lack of preparation could have potential health, safety, 

and security implications, and lead to public embarrassment for 

NRC and Agreement State regulators. 

Recommendation: 

2. Develop formal procedural guidance for identifying what 

information is needed about Agreement State programs and 

materials licensees in the event that an Agreement State is no 

longer capable of adequately performing its function of 

protecting public health and safety for an indeterminate period 

of time. 
Audit of NRC’s Agreement State Program 

13

C. NRC Lacks Standardization in Communications With, and 

Collection of Information From, the Agreement States 

NRC’s communications with, and collection of information from, the 

Agreement States is not standardized even though NRC serves as 

the Federal-level presence for materials safety and security under 

the National Materials Program. Both the Atomic Energy Act and 

the agreements between NRC and the Agreement States 

emphasize the importance of cooperation between the agency and 

the States. Also, the National Materials Program focuses on the 

shared program activities between NRC and the Agreement States 

as well as the Agreement States’ abilities to assume a greater 

proportional responsibility for shared program activities. However, 

NRC’s information exchange efforts, while better now than in 

previous years, need additional improvement. This is due to a lack 

of (1) standardization in NRC’s communication procedures, and (2) 

a standardized data collection process that can be used as a basis 

for developing a national information sharing tool. As a result, 

some States may be unaware of important issues, and NRC does 

not have a full and accurate picture of Agreement State regulatory 

activities. 

The Importance of Cooperation Between NRC and the 

Agreement States 

Both the Atomic Energy Act and the agreements between NRC and 

the Agreement States emphasize the importance of cooperation 

between the agency and the States. Section 274a of the Atomic 

Energy Act, “Cooperation With States,” emphasizes the need to 

establish programs for cooperation between the States and the 

Commission with respect to control of radiation hazards associated 

with the use of Agreement materials. Furthermore, a typical signed 

agreement between NRC and an Agreement State includes a 

clause about NRC using best efforts to cooperate with the States in 

the formulation of standards and regulatory programs to protect 

against hazards of radiation and to ensure the State’s program will 

continue to be compatible with the agency’s program. 

NRC’s agreements with States include language about how NRC 

and the States will use best efforts to keep each other informed of 

proposed changes in their respective rules and regulations, and to 

obtain comments and assistance from each other. The two most 

recent State agreements—with Minnesota and Pennsylvania—also 

include a statement that NRC and the State “agree to keep each 
Audit of NRC’s Agreement State Program 

14

other informed of events, accidents, and licensee performance that 

may have generic implications or otherwise be of regulatory 

interest.” 

As the Federal authority in a National Materials Program, NRC has 

the responsibility to communicate regulatory and other program 

changes to its Agreement State partners, such as changes in 

licensing procedures. NRC is also responsible for collecting 

information from the Agreement States for different purposes, such 

as obtaining State responses to the pre-IMPEP questionnaire or 

information about the status of certain types of licensees operating 

in the States. 

Information Exchange Efforts Could Be Improved 

Agreement State officials have stated and OIG analysis shows that 

NRC’s communications with, and collection of data from, the 

Agreement States could be improved. NRC employs several 

methods to exchange information with the Agreement States, 

including the use of formal letters, e-mail messages, telephone 

calls, working groups, and meetings, and through the IMPEP 

review process, which provides an opportunity for NRC and 

Agreement State staffs to share information and best practices. 

However, NRC’s communications to the Agreement States through 

the RSAOs and via e-mail could be improved. Furthermore, NRC 

does not systematically collect important program data from the 

Agreement States outside of IMPEP. 

Communications 

Some Agreement State officials said that communications with 

NRC have improved over the years. The States are particularly 

appreciative of having NRC technical staff available for 

consultation. However, NRC’s communications to the Agreement 

States through the RSAOs and via e-mail need additional 

improvement. 

A primary means of communicating with the Agreement States is 

through one of the five agency RSAOs, who are located in three of 

the four NRC regions. The RSAOs are afforded flexibility in 

developing rapport with their assigned States, and much of their 

communications are informal. However, this flexibility does not 

guarantee that important information exchanges between NRC and 

the Agreement States take place. For example, in February 2008, 

the RSAOs were asked by Region I to e-mail their Agreement State 

contacts and request that the States check with all manufacturer 
Audit of NRC’s Agreement State Program 

15

and distributor licensees. The purpose was to alert these licensees 

about an unusual purchase inquiry that was received by an NRC 

licensee from an unidentified suspicious buyer. However, two of 

the five RSAOs were not familiar with the unusual purchase inquiry, 

and OIG has not been able to confirm whether all of their 

Agreement States were ever contacted. OIG is aware of at least 

two Agreement States that were not contacted by NRC about the 

unusual order, and officials in one of these States said they had a 

number of manufacturer and distributor licensees in the State. 

Another way NRC communicates with the Agreement States is via 

e-mail, which several Agreement States have described as 

overwhelming. Some State personnel reported getting the same email several times from NRC sources as well as from other State 

staff. State officials have also said that, given the volume of 

information coming from NRC, it can be difficult to separate the 

truly important from the “nice-to-know” information. For example, 

an Agreement State official said that he does not always have time 

to read everything and determine that a response or some action is 

required of him. Another Agreement State official said he received 

almost 1,400 e-mails from NRC during a 1- to 2-year period. 

Data Collection 

NRC does not systematically collect program data from the 

Agreement States outside of IMPEP. While NRC periodically 

collects a large amount of information from the Agreement States 

through the IMPEP process, such information is limited to those 

items that NRC deems necessary to assess an Agreement State’s 

program adequacy and compatibility. Other types of information—

such as State notices of suspended or revoked licensees, and 

enforcement and allegations data—are not routinely collected for 

the purposes of trending, analysis, and data sharing. 

One type of data-sharing that a number of Agreement States 

suggested NRC could enhance is the collection and sharing of 

information on licensee revocations and suspensions. The concern 

is that a licensee with a revoked or suspended license in one State 

could simply apply for a license in another State. The agency 

currently maintains a list of NRC licensees that have been 

suspended or revoked, and the agency sometimes shares this 

information with Agreement States. NRC encourages voluntary 

sharing amongst the Agreement States of this information and 

some Agreement States already share information about revoked 

or suspended licensees with neighboring States, but NRC does not 

collect this kind of data from the Agreement States. 
Audit of NRC’s Agreement State Program 

16

NRC also does not routinely and systematically collect Agreement 

State allegations and enforcement data. FSME officials are 

reluctant to do so, citing a lack of any need to know of or use such 

information. FSME managers also pointed out that there is no 

regulatory requirement or other Federal mandate that requires 

Agreement States to submit or NRC to collect this information. 

Nonetheless, an FSME manager stated that NRC has 

programmatic oversight responsibility for the program and, as the 

Federal regulator, NRC should not relinquish that responsibility. 

The manager also stated that if there were a serious event in an 

Agreement State and Congress became interested in that event, 

Congress would turn to NRC to testify, not the Agreement State. 

Agency Lacks Standardized Communications Procedures and 

Data Collection and Sharing Tools 

NRC lacks standardized procedures and tools to facilitate both 

communications with and data collection from the Agreement 

States. For communications with the Agreement States, the 

agency lacks formal standardized procedures or guidance for 

RSAOs, including for communicating significant events through the 

RSAOs or other means. With regard to data collection from the 

Agreement States, NRC lacks a standardized data collection 

process that can be used as the basis for a national information 

sharing tool. 

Communications Procedures Needed 

NRC lacks formal standardized procedures or guidance for RSAOs 

to communicate with the Agreement States. Furthermore, the 

agency has not developed a procedure for prioritizing the types of 

communications provided to the Agreement States. 

The RSAOs are not aware of any formal standardized procedures 

or guidance for how they are utilized by the agency to communicate 

with the Agreement States. An NRC manager cautioned that 

adding a procedure may result in inefficiencies if it required RSAOs 

to get permission for every communication with the States. 

However, the manager did not make a distinction between the 

RSAOs’ typical day-to-day communications activities and those 

communications efforts that are in response to an unusual or 

significant event. 

Had such processes been in place, NRC’s Agreement State 

partners would have had adequate notification to check with the 

manufacturer and distributor licensees in their respective States 
Audit of NRC’s Agreement State Program 

17

about the unusual purchase inquiry from a suspicious buyer 

discussed in the earlier example. As one Agreement State official 

observed, NRC does not have any clear method for releasing this 

kind of information to the States. The State official considered this 

peculiar because NRC always wants the States to have a record of 

every incident that occurs. 

NRC management has also acknowledged problems with the way 

the agency communicates to Agreement States via letters and email. The lack of a procedure has recently prompted FSME 

managers to begin implementing ways to disseminate information 

to the States. 

Data Collection Process Needed 

NRC lacks a standardized data collection process that can be used 

as the basis for sharing information on a national level. Such a 

process would include documented procedures and guidance—

along with some information management tools—to facilitate the 

collection and/or sharing of “bad actor” licensee information, and 

allegation and enforcement data. 

NRC managers indicated that there is a need for a process to 

capture suspended/revoked licensee and enforcement data. For 

example, a few years ago, an applicant was banned from getting a 

radiography license in multiple States. As one manager said, this 

type of information is important and there should be a system for 

capturing it. Another manager said that the idea of a national 

database that keeps track of this kind of information has been 

considered before, but these efforts have not progressed. 

FSME managers cautioned that it would be difficult to implement a 

data collection process because it would require consensus among 

all 35 Agreement State regulators. One manager said that some 

States might be resistant to change because of budgeting 

constraints. Furthermore, Agreement State officials point out that 

such a database could be inappropriately used to blacklist potential 

licensees. Still, as one State official said, if another State has “bad 

actors” then the other jurisdictions need to know about them as 

well. OIG contends that NRC could establish a data collection 

standard via new rulemaking. 
Audit of NRC’s Agreement State Program 

18

A process to support systematic enforcement data collection is also 

needed. An NRC manager stated that an enforcement database 

would benefit reciprocity8

 because a State would be able to look up 

a licensee and identify any violations that occurred in another State. 

Impacts on NRC and State Regulatory Efforts 

Lacking standardized procedures and tools to facilitate both 

communications with and data collection from the Agreement 

States, NRC and State regulators are denying themselves benefits 

of information sharing. Moreover, the consequences of not 

collecting information, such as licensing and inspection practices, 

incidents, and other technical and statistical information, could 

potentially impact the American public health and safety and also 

hamper the identification and evaluation of issues and options for 

the development of program responses to national problems. 

NRC also assumes risks in not having standardized 

communications, prioritization, and data collection procedures. 

Ultimately, this increases the likelihood that States are not 

cognizant of some important issues and “bad actors,” and NRC not 

having a full and accurate awareness of Agreement State 

regulatory activities. By improving communication and data sharing 

activities, coordination and cooperation between NRC and 

Agreement States should be enhanced. 

Recommendations: 

3. Develop a set of procedures that standardizes communications 

from NRC to the Agreement States. 

4. Develop a standardized data collection process that can be 

used as the basis of an information sharing tool on a national 

level. 

 

8 Reciprocity is the notion that a licensee from one Agreement or non-Agreement State can operate in 

another Agreement or non-Agreement State, which can accept the license at face value as long as the 

licensee follows the rules of the State in which it wishes to operate.
Audit of NRC’s Agreement State Program 

19

D. Weaknesses Exist in NRC’s Review of Agreement State Event 

Reporting 

NRC’s reviews of whether an Agreement State has appropriately 

reported all events to the Nuclear Material Events Database 

(NMED) may not be consistently performed. While IMPEP reviews 

do look at NMED data submitted by Agreement States, the relevant 

IMPEP procedure does not require an analysis of unreported 

events to determine whether such events are being appropriately 

identified for and included in NMED. Consequently, NRC and the 

public may have an inaccurate accounting of material events in 

some States, which could also hamper events data trend analysis 

efforts. 

The Purpose of NMED

Agreement State licensees are required to report the occurrence of 

incidents and events involving the use of nuclear materials to the 

appropriate regulatory agency. NRC also requires Agreement 

States to report some of these events to NMED. Under the 

authority of the Atomic Energy Act and the Energy Reorganization 

Act of 1974, as amended, NRC evaluates material event reports for 

both NRC and Agreement State licensees. NRC compiles 

materials event data through NMED and the agency’s Event 

Notification system.9

 NMED contains a historical collection of 

information on the occurrence, description, and resolution of events 

involving the use of radioactive materials in the United States and is 

intended to accommodate the sharing of material event data 

submitted by Agreement States and non-Agreement States. FSME 

uses the data collected in NMED for trending analysis. 

The FSME procedure which establishes a process for the 

collection, control, and preliminary review of material events that 

have been reported to NRC by the Agreement States is SA-300, 

Reporting Material Events. This procedure also provides U.S. 

Code of Federal Regulations regulatory reporting requirements for 

material events. Moreover, it encourages States to voluntarily 

report an event that might be of safety significance or of generic 

interest or concern, even though it does not meet the regulatory 

reporting requirement. 

 

9 The Event Notification system is an NRC automated event tracking system used by the NRC Operations 

Center to track information on incoming notifications of the occurrence of significant material events that 

have affected or may affect public health and safety.
Audit of NRC’s Agreement State Program 

20

The IMPEP teams are tasked with reviewing Agreement State data 

submissions to NMED. According to SA-105, Reviewing the 

Common Performance Indicator, Technical Quality of Incident and 

Allegation Activities, IMPEP teams should examine a sample of 

program incident response and allegation activities. This analysis 

is done to confirm that appropriate followup measures to the 

reported events are taken, whether NMED notification is performed 

in a timely manner, and that the number and type of event reports 

and technical quality of information recorded in NMED and on 

record at the Agreement States are consistent. 

NRC has responsibility for performing analysis on the information 

contained in NMED for each major event type to identify any 

statistically significant trends. FSME is the NRC office responsible 

for NMED, and uses Idaho National Laboratory for coding and 

quality control of the data. Idaho National Laboratory primarily 

obtains the data for NMED from the agency’s daily reports (event 

notifications, preliminary notifications, and morning reports), NRC 

inspection reports, and Agreement State event notifications. 

Though Idaho National Laboratory maintains the database, NRC 

staff conduct a weekly review of all new material event notifications 

received by the NRC Operations Center and followup reports 

entered into NMED.10

IMPEP Reviews of NMED May Be Inconsistent 

IMPEP reviews include an evaluation of whether the subject 

Agreement State has appropriately reported all events to NMED, 

but this effort may not be consistently performed. OIG’s analysis of 

data in NMED indicates that some Agreement States may have 

underreported events to NMED. For example, the number of 

events submitted by one State that OIG reviewed was not 

commensurate with the number of events reported by other States 

when adjusting for the size of the State programs. However, the 

reasons for this State’s relatively low number of submittals to 

NMED was not addressed in the last full IMPEP report for the 

State. Nor is it clear from the report whether the IMPEP team 

specifically reviewed incidents that were not reported to NMED for 

potential inclusion in the database. 

 

10 The objective of the review is to identify any events that may involve generic safety concerns or could 

have significant impact on public health, safety, or security.
Audit of NRC’s Agreement State Program 

21

Relevant IMPEP Procedure Does Not Require Analysis of 

Unreported Events 

The FSME procedure SA-105 does not require the IMPEP team to 

review the States’ events in order to determine whether events not 

reported to NMED were appropriately not reported. The procedure 

states the overall objective to verify that the information provided by 

the Agreement States on incidents for inclusion in NMED is 

complete and accurate. However, the review guidance in SA-105 

does not specifically guide the IMPEP team to sample events that 

were not reported to NMED and confirm that they were 

appropriately not reported. 

For example, SA-105 guides the IMPEP team to determine that the 

number of events, type of event reports, and technical quality of 

information recorded in NMED is consistent with the information on 

record at an Agreement State. But SA-105 does not specifically 

address those events that are not recorded in NMED for an 

analysis of whether they should have been included in NMED. 

Potentially Inaccurate Accounting of Events in Agreement 

States 

Given the lack of IMPEP guidance to review events that were not 

reported to NMED and confirm that they were appropriately not 

reported, NRC and the public may have an inaccurate accounting 

of material events in some States. Furthermore, this could also 

hamper trend analysis efforts that have occurred involving the 

licensed and unlicensed use of nuclear materials, identification of 

generic issues, and recognition of any inadequacies or unreliability 

of specific equipment or procedures. 

Recommendation: 

5. Revise the applicable IMPEP procedure(s) to include a review 

of Agreement State events that are not recorded in NMED for 

an analysis of whether they should have been included in 

NMED. 
Audit of NRC’s Agreement State Program 

22

IV. CONSOLIDATED LIST OF RECOMMENDATIONS

OIG recommends that the Executive Director for Operations: 

1. Develop a mechanism for conducting self-assessments and 

capturing lessons learned for IMPEP on a regular basis.

2. Develop formal procedural guidance for identifying what 

information is needed about Agreement State programs and 

materials licensees in the event that an Agreement State is no 

longer capable of adequately performing its function of 

protecting public health and safety for an indeterminate period 

of time. 

3. Develop a set of procedures that standardizes communications 

from NRC to the Agreement States. 

4. Develop a standardized data collection process that can be 

used as the basis of an information sharing tool on a national 

level. 

5. Revise the applicable IMPEP procedure(s) to include a review 

of Agreement State events that are not recorded in NMED for 

an analysis of whether they should have been included in 

NMED.
Audit of NRC’s Agreement State Program 

23

APPENDIX A 

SCOPE AND METHODOLOGY 

The audit objective was to assess NRC's oversight of the adequacy 

and effectiveness of Agreement State programs. OIG focused its 

review on the IMPEP process as well as other elements of the 

Agreement State program. To address the audit objective, OIG 

reviewed IMPEP guidance, attended IMPEP reviews, reviewed 

Federal guidance related to emergency preparedness planning, 

and analyzed the process for collecting and disseminating 

information to Agreement States. Additionally, OIG analyzed 

program documents, reviewed relevant management controls, and 

reviewed documentation from internal and external sources. Some 

of the key documents reviewed include: 

3⁄4 Section 274 of the Atomic Energy Act, “Cooperation with 

States.” 

3⁄4 Management Directive 5.6, Integrated Materials Performance 

Evaluation Program. 

3⁄4 Management Directive 5.9, Adequacy and Compatibility of 

Agreement State Programs. 

3⁄4 OMB Circular A-123, Management’s Responsibility for Internal 

Control. 

3⁄4 SA-102, Reviewing the Common Performance Indicator, 

Technical Quality of Inspections. 

3⁄4 SA-105, Reviewing the Common Performance Indicator, 

Technical Quality of Incident and Allegation Activities.

3⁄4 SA-112, Emergency Suspension of a Section 274b Agreement. 

3⁄4 Federal Continuity Directive 1, Federal Executive Branch 

National Continuity Program and Requirements. 

3⁄4 NRC’s agreements with States. 

3⁄4 Letters issued to Agreement States by FSME. 

3⁄4 Material events reported to NMED by Agreement States from 

January 1, 2007, to June 30, 2008. 
Audit of NRC’s Agreement State Program 

24

3⁄4 IMPEP review reports issued from January 19, 2007, to August 

27, 2008. 

Auditors also conducted interviews with more than 60 agency and 

Agreement State employees, including NRC managers and staff at 

Headquarters and the regions, and Agreement State managers and 

staff members from 15 States. 

OIG conducted this audit at NRC Headquarters, one region, and 

selected Agreement States nationwide between February 2008 and 

August 2008 in accordance with generally accepted Government 

auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based 

on our audit objectives. We believe that the evidence obtained 

provides a reasonable basis for our findings and conclusions based 

on our audit objectives. 

Major contributors to this report were Sherri Miotla, Team Leader; 

R.K. Wild, Audit Manager; Eric Rivera, Senior Auditor; David Ditto, 

Senior Management Analyst; and Rebecca Ryan, Management 

Analyst. 
Audit of NRC’s Agreement State Program 

25

APPENDIX B 

FORMAL AGENCY COMMENTS 
Audit of NRC’s Agreement State Program 

26
Audit of NRC’s Agreement State Program 

27

APPENDIX C 

OIG ANALYSIS OF AGENCY COMMENTS 

On December 3, 2008, OIG provided a draft report to the Executive 

Director of Operations. OIG subsequently met with managers from 

the Office of Federal and State Materials and Environmental 

Management Programs and the Office of Nuclear Security and 

Incident Response on December 16, 2008, and again on January 

9, 2009, to address agency concerns with the draft report. OIG 

modified the report as appropriate in response to comments made 

by agency officials. On February 26, 2009, the Executive Director 

for Operations provided a formal response to this report. OIG’s 

analysis of those comments are provided below. 

NRC Comments 

The U.S. Nuclear Regulatory Commission (NRC) staff appreciates 

the recommendations resulting from the audit, and views these 

recommendations as enhancements to an already strong program 

that is a model for Federal and State government relations. The 

NRC’s Agreement State Program and the Integrated Materials 

Performance Evaluation Program (IMPEP) have been recognized 

domestically and internationally for its effectiveness. NRC has 

designated IMPEP as the program used to periodically evaluate the 

Agreement States to ensure adequate protection of public health 

and safety, as required by Section 274j of the Atomic Energy Act of 

1954, as amended. The International Atomic Energy Agency used 

IMPEP as a basis when developing its program to review member 

countries. In 2004, IMPEP was recognized by Harvard University 

as a Top 50 Finalist for the Innovations in Government Award. The 

staff does not consider any of the OIG findings as indicative that the 

Agreement State Program and IMPEP fail to continue to adequately 

fulfill their respective statutory requirements. The staff believes that 

the resolution of OIG’s recommendations will continue the 

improvement of both of these model programs. 

Some of the audit findings and observations in this report are more 

indicative of a program where regulatory authority is delegated, 

rather than where regulatory authority is discontinued. The NRC’s 

Agreement State Program is a relinquishment, or discontinuance, 

of NRC’s regulatory authority where the State assumes that 

OIG Response 

OIG agrees that the recommendations will enhance the Agreement State and 

IMPEP programs.
Audit of NRC’s Agreement State Program 

28

regulatory authority. The statute governing the Agreement State 

program requires that NRC maintain an oversight role to ensure 

that public health and safety is adequately protected across the 

nation. The audit report recognizes this unique transfer of Federal 

responsibility to the States that sign Agreements with NRC in the 

Background Section; however, some of the findings in the draft 

report reflect a program where regulatory authority is delegated. 

For example, on page 23, starting on line 19,11 the report implies 

that NRC should routinely and systematically collect information, 

such as allegation and enforcement information, from the 

Agreement States. Under a relinquishment of authority, the need to 

routinely collect this information is difficult to justify, and may not be 

warranted. As appropriate, such information is evaluated during 

IMPEP reviews. 

The Agreement States did not have an opportunity to review and 

comment on the draft audit report, even though many of the 

findings and recommendations are based upon discussions with 

Agreement State personnel. The staff suggests OIG consider 

finding a method of sharing their predecisional information with the 

Agreement States, and otherwise let them take a meaningful role in 

the development process, especially regarding audit reports that so 

closely audit their programs in the future. 

 

11 The page number cited in the formal agency comments refers to an earlier draft of this report. 

The relevant citation in the final report is the section titled “Data Collection” on page 15. 

OIG Response 

OIG holds the view that (1) there should be a balance between the agency’s 

relinquishment of regulatory authority to the Agreement States and NRC’s 

responsibilities to oversee the program and (2) NRC’s oversight 

responsibilities should not be limited to determinations of State program 

adequacy and compatibility only through IMPEP reviews. The OIG report 

documents instances where additional types of Agreement State licensee 

information would be warranted to fulfill NRC’s role as a Federal-level partner 

in the Nationwide regulation of materials. In particular, allegation and 

enforcement data are precisely the types of information that would meet the 

requirement in recent NRC agreements with States that the regulatory 

partners “keep each other informed of events, accidents, and licensee 

performance that may have generic implications.”
Audit of NRC’s Agreement State Program 

29

With regard to OIG Recommendation 4, the staff believes that the 

legal and policy ramifications of such information collection by NRC 

need further review. In addition, the staff has efforts underway for 

improvements to the materials program that may result in achieving 

the same objectives. For example, pre-licensing visits, background 

checks, and changes to NRC’s “good faith presumption,” if 

adopted, would provide opportunities to identify individuals with 

questionable backgrounds prior to their approval. 

OIG Response 

OIG’s policy is to share draft reports with the responsible NRC organization or 

office of the program under review, which, in this case, were two offices. 

However, OIG also appreciates the importance of NRC’s coordinating with its 

Agreement States partners. OIG encourages NRC to incorporate the various 

perspectives of the Agreement States in developing a plan to address the OIG 

recommendations.

OIG Response 

As discussed in the report, NRC serves as the Federal-level partner in the 

National Materials Program and provides a coordinating role for all materials 

regulators. This helps ensure that the safety and security of radioactive 

materials is consistently regulated nationwide, rather than piecemeal among 

36 different regulators, specifically 35 Agreement States and NRC. In simple 

terms, OIG observed that there are some types of information that NRC does 

not currently collect, that some of the Agreement State program managers 

stated would be of value to them if NRC had collected it, and for which there is 

no mechanism in place for collecting and sharing such information. 

Recommendation 4 is designed to address these shortcomings.